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The first step to saving money was to track everything I spend everyday. And I mean EVERYTHING, every pop for a pop machine, every pack of gum, every ATM service fee, everything. I saved every receipt everyday, and also made sure I kept a small pad of paper and pen with me for anything that didn’t have a receipt. I set up a spreadsheet using openoffice (a FREE alternative to microsoft exel) and everyday when I got home I went thru my notes and receipts and entered them.

I found it useful to break things out into a few categories: groceries and household consumables, entertainment and eating out, healthcare, transportation, and clothing. After looking at a week or two of expenses, its very easy to see where to cut down on costs. Its good to make it a game, see if you can spend less each week until you get it down to the bare bones. For me the easiest place to start saving money was in the entertainment and eating out category. I work in downtown Chicago, and just switching from eating lunch out everyday to brown bagging it saved me $50 a week. I am fortunate in that I am not a coffee drinker and didn’t get swept up in the whole starbucks craze, but it amazes me the amount of coworker I have that drop $8-$10 a day at that place.

Only get as cheap as you can feel comfortable with. Some people just wont be able to bring themselves to stop having the daily starbucks, but try to cut back, maybe skip one day a week.

So start your spreadsheet and start tracking that spending, you will be amazed at how much you spend on little stuff.

Saving money isn’t the most fun. Every time you think about doing it, you think of other, much more fun things that you could do with the money. Saving money means that you have less money to spend. That can be a pain. Saving money is very important, though. Having some money saved can stop you from getting into real financial troubles. Taking the time and making the effort to save now can pay huge dividends in the future.

You don’t have to save millions of dollars to make it worthwhile. Just putting aside a few dollars every month can make a huge difference in the long run. Little bits of money can quickly add up to a significant amount which can help when you really need it. In this case, when we talk about savings, we mean liquid reserves like cash or a savings account. Liquid means that you can quickly and easily access the money when you need it. Cash is liquid. Real estate is not. Here are three reasons why savings are important:

Emergencies.

If something comes up that you have not predicted and prepared for and it is going to cost you some money, it could create a real problem if you are not prepared for it. An injury requiring medical treatment, a major car repair or a trip that has to be taken at the last minute are all examples of emergencies. Without savings set aside, these situations can put you into a huge hole. By having money saved you are prepared for these unexpected emergencies and you can deal with them.

Major payments.

Say, for example, you are going on your honeymoon. The wedding was a bit more expensive than you anticipated and you are a bit short on money for your trip. You could use your credit card, but then you will be paying high interest rates on those costs, meaning your trip will cost you more than you intended. Instead, you can use your savings, which will cost you nothing in interest. The money you save in interest payments will let you build your savings up again quickly.

Peace of mind.

It seems that problems happen at the times when you are least ready to deal with it. Being in a situation where you are financially unprepared is very stressful. By having some savings built up you are ready for anything that might arise. This means that you are less stressed out and happier. Taking the time to build up your savings now will be more than worth it in the comfort and happiness it allows you to feel.

If you are trying to save up money, you may find it difficult. When you are not used to saving, then you may spend everything that you earn. This can leave it hard to know what to do in order to save some.

One method that some people use is to put some money in a savings account when they get paid. Then it is not there for them to save so they have no choice but to spend less as they have less money to spend each month. This is great for people who do have enough money each month but tend to spend it all.

For people who find it difficult to manage their bills each month, saving may seem impossible. However, it is a good idea to see whether you can reduce any of your expenses and this could free up some money to save. You can do this by seeing whether you can reduce your utility bills by swapping providers, finding cheaper insurance, buying food from a cheaper supermarket and running the car less.

Increasing income can also help you to save more. This can be done by working longer hours in some jobs, asking for more work, getting a second job or changing job to one that pays more. This can be a difficult thing to do in this economic climate and so alternatives such as selling items you do not use any more or starting up your own business could be better. It is worth thinking about what skills you have and how you might be able to use them to make some extra money that you can save.

It can be difficult to reduce spending, but if you really want to build up your savings, then it can be possible. You just have to be motivated to be able to do this.